Member Info for WiganWarriors

Hi Rax. I think that’s a fair summary

Rax. Sure, but are you falling into the trap of assuming tight correlation between underlying business performance and financial analysis, verses share price. It’s the Market that sets the SP. No one is suggesting TW is bust, just no one is interested in chasing the SP higher when you can buy at these, or lower prices.

Terrace, I tend to agree. Many posters here pull figures out of the air without any real understanding of the cyclic nature of house building. Having said that, the builders have got better at managing the cycle and only really build at a rate they can sell, rather than just build them and hope to sell. This is why they are tending towards fewer but larger sites, as it’s easier to manage run rate. Be interesting to see if Wimps can pull off trick of reducing land bank by ~20% over 5 yrs, if sales slowing. Means mix of increasing volume and reducing land purchase. Once the reporting season out of the way things will settle, notwithstanding the fragile macro environment. IMHO, plenty time to build a position, which should pay off over next 12/18 months., but can’t see any real reason for the shares to rise too quickly, unless private equity comes sniffing around given the low debt and strong cash generation.

There’s some history on Buy backs. Wimps undertook significant buy backs as the shares started to weaken before the last crash, and as you can imagine destroyed a good deal of shareholder capital as the shares continued to collapse. The then FD paid with his job. I suspect PR is very wary, and prefers to distribute excess cash directly to shareholders. Either way, let’s see what gets said tomorrow. Hopefully no significant negativity, otherwise we can expect a further leg down and continued weakness pending further sector updates, and of course Brexit shenanigans. IMHO, I suspect we are around the bottom here, and It will need a few months and a stable macro environment to enable a modest SP recovery.

Would be really interesting to know the circumstances which led to Ryan Mangold leaving, announced after 2017 results and before the Capital Markets day. His leaving terms point to a Settlement Agreement, which suggests he was asked to leave and in return he will be compensated. If I was a guessing man I would suggest that maybe he did not agree / believe that Wimps could deliver on the new strategy. Anyone have insider information.

Well, we are likely at the top of the cycle and everything will flatten, include sales and profits likely will stagnate. The market does not see any reason the chase the shares higher. We also have trading statements from BVS and PSN next week, which may help support the SP or send it lower if they reinforce the consensus of a slowing market.

To get a clearer picture of "new builds" you need to look at segmented stats. Second hand market is slow, but that just pushes some who need to move into new builds, thereby supporting that sector. London is slowing and pricing is flat, with build inflation around 3-4% means margins reducing on London sales. Best data is from ONS, as this breaks out new builds and provides solid comparative data. New builds are increasing, although pricing is flattening so unlikely to see large profit growth this year if you factor in London. Visit the site for an entertaining read :-) Interesting to note that Public (Social) housing new builds falling so far this year. Will again reduce turnover for those who undertake high percentage of joint venture (Housing Association work).

If you map new builds against sales per site per week and you will get a feel for each builder to see if they are actually selling the increased number, or stockpiling. My take is that builders not stockpiling as they would slow down the build rate if that was the case. Gone are the days when they just built them, and then tried to sell them, they effectively build to order these days. So, as we know it is not as bad as the siren voices would like us to believe, just flattening out in line with the cycle.
https://www.ons.gov.uk/businessindustryandtrade/constructionindustry/datasets/outputintheconstructionindustry

Hi Nigel, my point is that you can’t look at eps in isolation as you also need to check if there have been any changes to shareholder equity, such as increased debt and new issuances. Also, Wimps justification for maintaining special shareholder distributions depends on selling more houses, using plots already owned. Market reserving judgement in case market slows and Wimps won’t be able to increase sales, and by implication can’t continue with special distributions.

Hi Nigel, re your post regarding eps growth. First of all there is no direct correlation between eps and the SP, in fact eps is easily manipulated higher as the underlying business is deteriorating. Also, note that for the accounts closing in 2018 Wimps eps actually fell. So by your reckoning (method) you should be predicting a fall in Wimps SP, not a rise as you always do regardless of the underlying metrics.

I would suggest that the trading update from McCarthy and Stone has upset the “builders”, and will weigh until the next round of half year trading updates are digested.

Nige and Co. In the interest of balance. These BB's are open to all points of view re respective investment opinions, be they long, short or just observational. It is irrelevant whether someone holds the underlying share, or not. Anyone who has a genuine interest in following any share is open to different opinions and research. Clearly, many on this BB (and for that matter TW BB) are rather naive when it comes to establishing "fair value". There are times to buy / sell shares and times to stand back and wait. This does not mean that anyone should be excluded from posting, whilst they wait for the right moment. The predictable few seem to believe that what gets said on this BB somehow affects the sentiment and respective SP of any share, likely because their own holdings are underwater and their input is tempered by denial. IMHO, ITV are likely to fall further before they get better as TR points out they are "old tech", and will need a couple of years before any light at the end of the tunnel appears.

In the interest of balance, and to point out the not so obvious to some posters. It’s the Market that sets the SP. Atempts to predict the SP by calculating basic metrics on the the back of a fag packet, are just a distraction. Keynes had a useful aphorism to illustrate this point; a prize to the poster who can remind us 😃

To be fair, this wobble is typical of the Builders, and has been a feature for the last few years. Nothing new. The Market likes to undertake price discovery on a regular basis, given the sector and macro uncertainties. No different from this time last year. Also, TW is a heavily traded stock with respect to the professionals who are happy to pull it around a little and scalp whenever possible. Just need to see through the noise. Finally, if you read the RICS report things are picking up (relatively) outside of London and south east, and whilst the second hand market does have some negative effects on new sales it’s not as much as perceived. The mass builders are making hay with HTB. Similarly CRST report was not that bad when you strip out social housing elements, 5% increase in ASP. Overall, the the siren voices talking down the sector when the underlying business is nowhere near as bad as portrayed. If you structure your trades on a SB basis at these prices levels it’s hard not to make shed loads if you just sit on them. Of course , IMHO.

All for one. Buy to Let and Help to Buy.

All for one, I suspect that you are mixing up BTL with HTB.

Hi Tommy, in your 12:55 post you say that with the dividend it makes 212 (ish). If the SP closes at 202 today, it will open ex-div tomorrow ~ 192. It may then rise, or fall as usual. Where do you get 212 from, with respect to any buy / sell timing considerations.

In the interest of balance; I find myself repeating that a lot these days :-). Bash has a fair point that if Tommy posts detailed plays for trading execution, it is likely that another BB poster will analyse, and point out discrepancies. Tommy's opening statement that if TW are at 210, and there is a dividend payment of ~ 10, then that makes 220, deserves qualification. Especially as the next step is followed by selling TW to buy back ITV. It is more reasonable to assume that you are selling at 200, rather than 220. Either way, as others point out it is best not to post personal information BB's as you never know who is watching, Tax Man included :-) Maybe a little less in the way of strident views, and more in the way of opinion (regardless of whether it is long or short oriented) which is well researched and based on quantifiable evidence, or reasonable assumptions re sector or macro environments. So, settle down girls, and I for one would appreciate less of the social chit chat, and more interesting analysis.

In the interest of balance. Not all investors are "long" oriented. Some investors arrive at the conclusion that the SP is too high, given the outlook, metrics, sector, misrepresentation etc., and are therefore minded to trade "short". This is perfectly acceptable, even though some inexperienced posters on this BB don't seem to understand this. As for actually holding positions (long or short) at the time they post, this is actually irrelevant. They may be posting their views, and may be planning to act when the trade makes most sense according to their own criteria. Finally, any serious investor is interested in different perspectives re any share, regardless of whether it aligns with their own respective views. An open mind is the best way to broaden ones judgement. IMHO, some of the more frequent and noisy posters just don't seem to understand the basics of "fair value".

For those who have the time, and inclination, Wimps are streaming the presentations live. Starting at 1015 hrs. https://www.taylorwimpey.co.uk/corporate/investor-relations/reporting-centre/2018/capital-markets-day

Forgot : https://www.bankofengland.co.uk/markets/funding-for-lending-and-other-market-operations